that a lease or a contract as herein provided has been made and guaranteed by a surety bond.

SEC. 7. That the Secretary of Agriculture and the Secretary of War shall each submit annual reports to Congress of operations and results obtained and of receipts and disbursements.

SEC. 8. That all laws or parts of laws in conflict with this act be, and the same are hereby, repealed.

(The clerk of the committee here also read aloud the following letter from the Secretary of War:)

Hon. JOHN M. MORIN,

WAR DEPARTMENT, Washington, February 18, 1928.

Chairman Committee on Military Affairs,

House of Representatives.

DEAR MR. MORIN: The receipt of your letter of January 27, 1928, inclosing copy of H. R. 10028, requesting the views of this department, is acknowledged. Since the submission of the Ford offer to Congress by Mr. Weeks, under date of February 1, 1922, this department has abstained from expressing any views as to the policy which should be followed by Congress in disposing of Muscle Shoals. The last expression of policy by the Executive that has been brought to my attention is contained in the message of the President dated December 6, 1927, in which he says:

"The last year has seen considerable changes in the problem of Muscle Shoals. Development of other methods show that nitrates can probably be produced at less cost than by the use of hydroelectric power. Extensive investigation made by the Department of War indicates that the nitrate plants on this project are of little value for national defense, and can probably be disposed of within two years. The oxidation part of the plants, however, should be retained indefinitely. This leaves this project mostly concerned with power. It should, nevertheless, continue to be dedicated to agriculture. It is probable that this desire can be best served by d sposing of the plant and applying the revenues received from it to research for methods of more economical production of concentrated fertilizer and to demonstrations and other methods of stimulating its use on the farm. But in disposing of the property preference should be given to proposals to use all or part of it for nitrate production and fertilizer manufacturing."

So far as I can see, the proposed bill is not in contravention of the policies therein suggested by the President.

There are one or two minor matters which I feel I should bring to your attention:

(a) I think that the bill should provide that the buildings and equipment turned over to the Secretary of Agriculture should be maintained in at least their equivalent value for war purposes, as outlined by the President.

(b) In addition to the operation of the plants themselves it is necessary to maintain and operate (including lighting) the dam and locks, while some of the machinery used in producing power will be worn out and need replacement during the term of the proposed lease. Therefore I suggest that section 4, page 4, line 3, the words "operation, maintenance, and upkeep," should be amended to read "the operation, including the locks and dam, their lighting, maintenance, repair, and necessary replacements."

(c) It is further suggested that more advantageous financial arrangements could doubtless be made if the bill permitted leasing the properties for a longer period than is stated and did not provide for recapture at the end of 10 years. Under the proposed recapture provision it appears that any lessee must protect his interests by amortizing within the 10-year period all the transmission lines he must build for the distribution of Muscle Shoals power. This would necessarily be reflected in an appreciably reduced rental price for the power properties. It would appear that a greater revenue could be derived from the properties if provision were made for a lease for a longer period.

Very sincerely yours,

DWIGHT F. DAVIS, Secretary of War.

(The clerk of the committee here read aloud the following communications from the Secretary of Agriculture and the Federal Power Commission :)

89830-28-20

STATEMENT OF DR. A. F. WOODS, DIRECTOR OF SCIENTIFIC WORK, OFFICE OF THE SECRETARY OF AGRICULTURE

Doctor Woods. I think, Mr. Chairman, that the questions that you have asked can be most effectively answered by Doctor Cottrell, who is chief of fertilizer and fixed nitrogen investigations of the Bureau of Chemistry and Soils, and has under him the work of this fertilizer research unit.

The CHAIRMAN. Do you not wish to make a general statement on the bill, or do you?

Doctor Woods. In our opinion the solution of the cheap fertilizer lies principally in the manufacture of concentrated fertilizer; that is, in cutting out most of our present low grade, nonconcentrated fertilizer, and the material which is not available for plant food, and thus saving freight and handling charges.

Studies of the industry have shown that this can be accomplished, and our researches have shown that we can make concentrated fertilizer that is entirely acceptable.

The problem of using it after it is made, however, is a new one that the farmers do not understand, and consequently the processes of the manufacture, which are well understood now-fairly well understood-have not been utilized for fertilizer purposes to any very great extent in this country.

In Germany, however, these concentrated fertilizer processes are coming very rapidly into use, due mainly to the fact that they have developed in Germany improved methods of nitrogen fixation in the synthetic ammonia process.

Those processes have also been brought into this country, and in Doctor Cottrell's laboratory in the department, catalysts and improved methods have now been worked out so that at present we have methods fully equal to the best methods in Germany.

The nitrogen is perhaps the most expensive element in concentrated fertilizers, and it is around this fixed nitrogen that we hope in the future to bring into wide use the improved fertilizers, by combining the ammonia with phosphoric acid and with potash in highly concentrated forms, available to the fertilizer industry and to the farmers, saving in costs of transportation and handling alone about 50 per cent of the present cost of fertilizer. That is the opportunity to reduce the cost of fertilizer to the farmers-that saving. That, we feel, can be accomplished if we can develop in this country commercially a satisfactory direct ammonia fixation of nitrogen which we believe is entirely practicable, and we believe that this bill will favor a development of that kind. The technical processes are all well understood. Doctor Cottrell and his men up in his laboratories have been working on this for a great many years, and I think will be able to answer any questions that you may have along that line.

Mr. WURZBACH. Do you believe that the farmers of this country could easily be educated to the proper use of the concentrated fertilizers?

Doctor WOODS. Of course, we will have to do what we did with the ordinary, present day fertilizers, through our experiment stations and extension service; through our experiment stations and extension service we will have to give demonstrations as to the conditions

under which they can be used, and how they are to be used. That is entirely practicable, and can be done if ammonia is available to do it with, and if we can get a supply of concentrated fertilizer.

The difficulty now is that that not having been done, and there being no demand from the farmers for the concentrated fertilizer, the manufacturers have not produced it, and practically all that we do produce in this country at the present time is exported. We expect to put the fertilizer industry on a basis that will be profitable to the farmer.

Mr. WURZBACH. You would answer my question, then affirmatively; it can be done?

Doctor Woods. It can be done and we have the machinery to do it. Mr. HUGHES. Perhaps these other gentlemen know this, but I do not; do these gentlemen represent the Agriculture Department?

The CHAIRMAN. Yes. I will say to the committee that Doctor Woods has said that he would prefer to have Doctor Cottrell answer any questions. I have prepared a list of questions which I have here, that for the benefit of the record I want to have him answer. I would like to propound these questions to Doctor Cottrell, and have them answered, without interruption, so as to have them in the record in one place, and afterwards every member of the committee will have the opportunity to ask whatever questions he desires. Doctor Cottrell, section 1 of the bill provides for the manufacture of fertilizer experimentally. What process would be used if the bill is enacted? STATEMENT OF DR. F. G. COTTRELL, CHIEF OF FERTILIZER AND FIXED NITROGEN INVESTIGATIONS, BUREAU OF CHEMISTRY AND SOILS, DEPARTMENT OF AGRICULTURE

Doctor COTTRELL. I rather assume that the major process or central idea around which the plan has crystallized there would be the direct synthetic-ammonia process. That seems to be the one that has the lead in cost and production, and in volume of product, and we are offered to-day

The CHAIRMAN. In what quantity will fertilizer be manufactured at Muscle Shoals?

Doctor COTTRELL. That will have to be determined as we go forward, but we would be going on the assumption that it would be initially a relatively small pilot development. We have at the Shoals the nearest thing to this type of operation that is required in plant No. 1, which was originally designed for a capacity of 8,000 tons of nitrogen a year. That is one-fifth the capacity of the large cyanamide plant, which has been mostly discussed in the hearings-that is 40,000 tons at plant No. 2, which is about five times as large a production as that of plant No. 1, originally designed for the other or direct synthetic-ammonia process. That plant was never completely installed, the armistice bringing sessation of operations, but one unit, which represented about one-fourth of the total design, was completed and experimentally operated.

Mr. FROTHINGHAM. Is that No. 1 or No. 2?

Doctor COTTRELL. No. 1; the synthetic-ammonia process. That was not successful at the time, and a good many of our studies have centered since on the difficulties encountered there on the catalyst, and

causes of the difficulties. Several plants of this kind are now operating in the country, and other large ones are building.

I think the rational thing for us to do would be, perhaps, to take that one unit and rebuild it in form up to date. That would represent a capacity of about one-fourth of the original No. 1 plant, or about 5 per cent of the large No. 2 plant.

In other words, you would have about 2,000 tons of nitrogen capacity a year; and my attitude toward it would be not to undertake any further commitments beyond that step until we had carried that through, and to use that as a plant around which to study these different forms of conversion of the ammonia into other products, and not to attempt to duplicate anything that the industry was doing and doing adequately at the time that we began any new piece of work. That is, it will take us some little time to get that plant into shape, and I would not want to make a commitment to-day as to what the next move should be with regard to capacity, because during that time I am very much in hopes that the industry will be increasing its production and changing the picture itself.

The CHAIRMAN. At what other places will experimental plants be established?

Doctor COTTRELL. We have no definite places in mind. I should look upon that as a matter that would develop out of the situation. That is to say, if there are any particularly strategic points as regards material or types of process that may come up as we work on. Particularly, I think that provision in the bill would be helpful in direct developments of demonstration work throughout the country as we carry on in that field. We might need small mixing plants and perhaps plants for preparing special materials that may be available in certain parts of the country. There might be byproducts from other industries; there might be special mineral products that were available there of nitrogen or potash or phosphorus for limited localities that should be studied in that regard.

We have the problem, for example, of these borings in Texas for the potash work. This bill, as I understand it, covers the problem not only of nitrogen, but of fertilizer generally, because our problem of nitrogen is practically connecting that with the rest of the fertilizer problem; getting a complete solution of the fertilizer problem.

The CHAIRMAN. Do you think that fertilizers may be produced at experimental plants?

Doctor COTTRELL. I should think that the only safe way would be to consider them as purely experimental or demonstration units, as far as anything we have in hand as yet is concerned. In other words, I would not want to make any commitment that would promise large tonnage production at such plants. I do not think we ought to undertake large production simply for the sake of tonnage.

The CHAIRMAN. You do believe that eventually it would be advisable or beneficial to the farmers to establish these experimental plants in different parts of the country, do you not?

Doctor COTTRELL. I should hope we could see places where they would be distinctly of advantage as we work along; but my idea in it would be chiefly to act as pilot plants, to lead the industry into supplying these things on the larger scale. That is, I would hope

that they would not distinctly lead the Government into indefinitely larger and larger operations in the manufacture; that the Government would only go into that in so far as it was necessary to carry each project to a point where it was sufficiently demonstrated to take much of the exceptional risk of development out of the problem, and to attract capital to take it over and develop it on a sound economic basis independent of the Government continuing.

The CHAIRMAN. Could the Department of Agriculture go ahead mmediately under the provisions of this bill if it was enacted? Doctor COTTRELL. It could go ahead immediately with the redesigning and revamping of the plant at the Shoals-this smaller unit. It would take us some little time to do that, so that actual production there could not be commenced for several months, at least.

The CHAIRMAN. What is the failure of catalysts that caused the trouble at Plant No. 1?

Doctor COTTRELL. During the war we worked on a number of different catalysts. We had insufficient information as to what was being done abroad, and it was not until after the close of the war that we got sufficient information, both from our own investigations and from information coming from abroad, gradually to put us on a basis of knowing what was a practical catalyst and how our own work checked with established experience. The catalyst around which the work chiefly centered in the actual plant at Muscle Shoals during the war, was a sodium amide, which is very sensitive to moisture, and when once affected by moisture in the gases passing over it, becomes permanently destroyed.

The catalyst that is now generally used throughout the industry is a much more permanent and robust material, consisting basically of metallic iron with small additions of potash and alumina, it being prepared in a rather elaborate and technical manner; and that material, while its effectiveness is reduced by the presence of water in the gases, is not permanently injured in such a treatment.

If the gases then become dry again, and you keep them dry, the catalyst's power is regained; and even with appreciable traces of moisture in the gas, the catalyst will still continue to function indefinitely, to a practical extent. In some of the plants they do not attempt to dry the gases nearly as completely as we do in other plants. It is a matter of degree rather than of complete desiccation. That, perhaps, is as satisfactory an answer as one can give, briefly, to the general question of comparison of these different catalysts.

The CHAIRMAN. Could your bureau develop a satisfactory catalyst for the synthetic ammonia process?

Doctor COTTRELL. Yes; we have done and published a good deal of work on that, as have also many others, so that one may say now, by and large, every one is using practically the same type of catalyst in the industry with only minor variations of detail.

We spent a large amount of our time, in the early work at the laboratory, in studying these catalysts, and published the information. A good deal of the work we have done has probably been repeated, or perhaps anticipated in some cases by other agencies, but many of those were not in a position to publish the work, and our chief contribution in that direction has been the fact that we have published the material so that every one knows now what the basis